DreamWorks Heads Might Leave; Viacom Chief Unfazed

Less than two years after Viacom's Paramount Pictures bought DreamWorks SKG, Steven Spielberg and David Geffen -- two of the founders of DreamWorks -- are hinting they might leave when their contracts expire in 2008, the WSJ reported Friday. In something of a departure from Hollywood decorum, Viacom CEO Philippe Dauman told a media conference this week the loss of the industry giants would be "completely immaterial" to Paramount's prospects. The remark irked DreamWorks CEO Jeffrey Katzenberg, who shot back that "[t]o suggest that not having Steven Spielberg is completely immaterial just seems ill-advised." The New York Times speculates that Dauman's use of the term "immaterial" in the financial sense was misconstrued by Katzenberg and others as a personal attack. Still, the relationship between DreamWorks and its corporate parent has been fraught for some time. The Journal suggests that the root of the trouble is a case of "seller's remorse" on the part of the DreamWorks crew, who produced a string of hits following their $1.6 billion sale of the company to Paramount in 2005. "We're happy being in the arms of a studio," Geffen said, but the founders of DreamWorks "want to function independently and get credit for our successes and failures."

Sources: Wall Street Journal, New York Times
Commentary: Coming to Terms With Dreamworks Animation • DreamWorks Animation Should Ride Shrek 3 To Growth
Stocks/ETFs to watch: DWA. Competitors: Pixar Animation Studios Inc. (private), Walt Disney Feature Animation (private), Blue Sky Studios Inc. (private). ETFs: PBS, PEJ
Earnings call transcript: DreamWorks Animation Q2 2007, Viacom Q2 2007

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